Belrise Industries IPO analysis

Belrise Industries IPO (initial public offering) will open for subscription on May 21, 2025, and close on May 23, 2025. Below is a breakdown of the auto component manufacturer's strengths, weaknesses and growth prospects to help investors make an informed decision. Belrise Industries IPO in a nutshell Quality: Between FY22 and FY24, Belrise Industries reported a three-year average return on equity (ROE) and return on capital employed (ROCE) of around 15 and 13 per cent, respectively. Growth: Between FY22 and FY24, its revenue and net profit grew annually by 18 and 9 per cent, respectively. Valuation: At the upper price band of Rs 90, the stock is expected to be valued at a P/E and P/B ratio of around 31 and 1.7 times, respectively. Overview: India is the world's largest two-wheeler vehicle market by volume with domestic sales of 18.4 million units in FY24. Belrise Industries is set to benefit from rising demand for two-wheelers, given their lower acquisition cost, higher mileage and low maintenance costs. However, competition from other established and traditional component players is a key risk for the company. About Belrise Industries Incorporated in 1996, Belrise Industries is an automotive component manufacturing company offering a diverse range of products for two-wheelers (63 per cent revenue contribution), three-wheelers, four-wheelers, commercial vehicles and agri-vehicles. Its portfolio comprises over 1,000 products, including sheet metal (71 per cent revenue contribution), suspension systems, plastic and polymer components, etc. Its products are used in both internal combustion engine (ICE) and electric vehicles. The company's exports contributed nearly 4 per cent to overall sales as of FY24. It currently operates 17 manufacturing facilities across 10 cities in India. Strengths of Belrise Industries Strong market share: Belrise Industries is one of the top three companies with a revenue share of 24 per cent in the overall two-wheeler metal components market as of FY24, suggesting a robust market presence. Weaknesses of Belrise Industries Customer concentration: Of its 29 customers (OEMs), the company derives nearly 64 per cent of revenue from just the top 10. Lack of pricing power: The automotive component industry is notoriously famous for a lack of pricing power as OEM customers pursue aggressive price reduction initiatives each year with their suppliers. If such practices intensified, it can lead to a decline in margins. Belrise Industries IPO details Total IPO size (Rs cr) 2150 Offer for sale (Rs cr) - Fresh issue (Rs cr) 2150 Price band (Rs) 85 - 90 Subscription dates May 21-23, 2025 Purpose of issue To repay debt and for general corporate purposes Post-IPO M-cap (Rs cr) 8,009 Net worth (Rs cr) 4,738 Promoter holding (%) 73 Price-to-earnings ratio (P/E) 31 Price-to-book ratio (P/B) 2 Financial history Key financials (Rs cr) 2-year annual growth (%) 12-months ending December 2024 FY24 FY23 FY22 Revenue 17.8 7540 7,484